Cisco signs up for Intel foundry

Cisco has signed up for Intel’s fabs for its made-to-order networking chips. It means that Intel has landed its biggest customer yet for its fledgling foundry business.

Under the deal, Intel will manufacture processors designed by Cisco. Cisco already buys chips that are designed and manufactured by Intel, and the the new orders represent a vote of confidence in Intel’s expansion efforts. Intel’s push would step up pressure on TSMC as this is really jumping on its turf.

Chipzilla’s move to contract chip manufacturing might offset a slump in its main personal computer chip business. Intel, which reported lower fourth-quarter earnings, has been slowing down plants to burn off stockpiles of unused chips. The only companies that have announced plans to hire Intel to make products they design are Tabula, Achronix and Netronome. These are small designers of programmable logic and networking chips.

Chief Executive Officer Paul Otellini has described Intel’s interest in the foundry industry as being at the first stage in a “crawl, walk, run” progression.